92 U.S.

156
23 L.Ed. 537

TERRY
v.
TUBMAN.
October Term, 1875

ERROR to the Circuit Court of the United States for the Southern District
of Georgia.
Mr. Harvey Terry for the plaintiff in error.
Mr. William H. Hull, contra.
MR. JUSTICE HUNT delivered the opinion of the court.

The plaintiff, a citizen of Georgia, brings his action to recover from Mrs.
Tubman the sum of $5,400. He alleges that he holds the circulating notes of the
Bank of Augusta, Ga., to that amount; and that the defendant was, in June,
1862, and thenceforth, a holder of three hundred and seven shares of the stock
of that bank, of the nominal value of $100 per share.

The Bank of Augusta was chartered Dec. 27, 1845, and its charter contained the
following provision:

'SECT. 3. That the individual property of the stockholders in said bank shall be
bound for the ultimate redemption of the bills issued by said bank in proportion
to the number of shares held by them respectively; and, in case of a failure of
said bank, all transfers of stock made within six months prior to a failure of
refusal on the part of said bank to redeem its liabilities in specie when required
shall be void, and the private property of the individual or individuals
transferring said stock shall be liable for the redemption of the bills of said
bank, as above stated.'

The defendant pleaded the Statute of Limitations, alleging that all of the banknotes sued on were issued by the Augusta bank prior to June 1, 1865; and that,
before that date, the bank had become insolvent, unable to meet its liabilities,

had voluntarily stopped payment and ceased to do business, and so continued

down to the time of the plea. To this plea the plaintiff demurred. The Circuit
Court rendered judgment for the defendant on this plea, from which the
plaintiff brings his writ of error to this court.
5

The Statute of Limitations of the State of Georgia was passed on the 16th
March, 1869, and is as follows, so far as this action is concerned; viz.:

'SECT. 3. And be it further enacted, That all actions on bonds or other

instruments under seal, and all suits for the enforcement of rights accruing to
individuals or corporations under the statutes or acts of incorporation, or in any
way by operation of law, which accrued prior to 1st June, 1865, not now barred,
shall be brought by 1st January, 1870, or the right of the party, plaintiff or
claimant, and all right of action for its enforcement, shall be for ever barred.

'SECT. 6. That all other actions on contracts, express or implied, or upon any
debt or liability whatsoever due the public, or a corporation, or a private
individual or individuals, which accrued prior to the 1st June, 1865, and are not
now barred, shall be brought by 1st January, 1870, or both the right and the
right of action to enforce it shall be for ever barred. All limitations hereinbefore
expressed shall apply as well to courts of equity as courts of law; and the
limitations shall take effect in all cases mentioned in this act, whether the right
of action had actually accrued prior to the 1st June, 1865, or was then only
inchoate and imperfect, if the contract or liability was then in existence.'

The plea demurred to alleges, and it is to be here assumed to be true, that the
bank-notes held by the plaintiff had been issued by the bank prior to June 1,
1865,the time specified in the limitation act just quoted. It is further alleged,
and to be taken as true, that, prior to that time, the bank had become notoriously
insolvent, unable to meet its liabilities, and had ceased to do business.

The question is, whether the right of action now sought to be enforced had, on
or before June 1, 1865, by means of these facts, accrued to the plaintiff. If it
had, the present action is barred by the statute; for it can hardly be contended
that this is not one of the actions embraced within the terms of the statute.

10

The plaintiff insists that no cause of action against the stockholder existed on
the 1st of June, 1865, and not until the bank had made its assignment in 1866,
its affairs had been administered, and a demand of payment of the bills had
been made upon the bank, and had been refused. His fourth point is this:

11

'4th, That the liability of said defendant stockholder (had not attached, and did
not attach, under said charter) to pay said bank bills before the assignment of
said bank and the assets of said bank had been administered and applied to
payment of its debts, and did not attach until demand for payment was made on
said bank bills; and, therefore, said action did not accrue before the first day of
June, 1865, but accrued since the assignment of said bank, and the
administration of the assets, establishing the ultimate liability of said
stockholders, and since the breach of contract to pay on demand,to wit, on
the day of commencement of this suit.'

12

In this point the plaintiff alleges that the defendant's liability did attach when
the assets of the bank had been administered and demand of payment made
upon the bank, and that the defendant was not liable until that time.

13

The facts upon which he claims the benefit of this legal result he alleges in his
complaint as follows:

14

'And your petitioner avers that the said president, directors, and company of the
Bank of Augusta afterwardsto wit, on the sixth day of January, A. D. 1866assigned and conveyed, for the benefit of its creditors, all of its property, both
real and personal, its choses in action, claims and demands of every kind
whatever, for the payment of its debts, in redemption of its bills, and so far as it
could do so by its own act, and for all the purposes of the payment of its debts
in the enforcement of the collection thereof, by suit or otherwise, and for the
purpose of its creation, has become and is a dissolved corporation; that it has no
place of business, rendering a demand for payment of said bills and a suit
against said corporation wholly futile and useless.'

15

There is in the complaint no allegation that payment of the bills has ever been
demanded of the bank; but presentment for payment is excused on the ground
that the condition of the bank rendered a demand useless. There is no averment
that a judgment had been obtained against the bank, or that a suit had been
commenced upon the notes. It is excused on the ground that it had assigned all
of its property, and was substantially dissolved.

16

There is no averment that its assets had been administered and applied to the
payment of its debts in any other manner than that it was insolvent, and had
made an assignment of its property.

17

The plaintiff's allegations fall far short of what, in his points, he insists is
necessary to constitute a cause of action.

18

The concurrence of the facts alleged in the complaint and in the manner
indicated brings into operation, as he insists, the provision of the charter that
the individual property of the defendant is bound for the redemption of the bills
of the bank, and authorizes the present suit against the defendant.

19

Upon the theory of the complaint before us, the ultimate redemption, for which
the property of the stockholder is by statute made liable, is not that amount or
proportion remaining after the assets of the bank have been applied, so far as
they will go, in payment of the bills; for there is no averment that the trust
under the assignment has been closed, or that a large proportion of the amount
due upon the bills will not be paid from that source. The plaintiff, in his present
suit, insists that the liability of the defendant has accrued to him for the reasons,
1st, That the bank did, in 1866, assign all of its property for the payment of its
debts; 2d, That thereby, for all purposes of the payment of its debts, it has
ceased to exist as a corporation; and, 3d, That a demand of payment and a suit
against the bank for the recovery of the bills would be useless. These facts
create a liability, he insists, which justify a suit against the defendant
commenced in 1872. If they do not, he shows no cause of action in his
complaint.

20

He has, however, demurred to the defendant's plea, which averred that the same
facts existed, and justified the commencement of a suit on the first day of June,
1865; in other words, that his right of action had accrued prior to June 1, 1865,
and that the same is barred by the statute quoted.

21

Thus, when the plaintiff avers that the bank made an assignment of all its
property, and thereby ceased to exist as a corporation, the defendant makes an
equivalent averment when he alleges that before the first day of June, 1865, the
bank had notoriously stopped payment and ceased to transact business, and has
thenceforth so continued. When the plaintiff alleges that for the reasons stated a
demand upon the bank for payment, or a suit against it, would be useless, the
defendant makes an equivalent averment when he alleges that on the first day
of June, 1865, the bank 'had become notoriously insolvent, and unable to meet
its liabilities.'

22

It seems to be quite clear that the same allegations made by the plaintiff to
show that he had a cause of action when he brought this suit in 1872 are found
in the plea he has demurred to, alleging that the cause of action was in existence
on the first day of June, 1865. If his complaint is good, the plea is good; if the
plea is bad, the complaint is bad.

23

A demurrer seeks the first fault in pleading, and it is with the plaintiff that the

23

A demurrer seeks the first fault in pleading, and it is with the plaintiff that the
first error exists, if error there be.

24

We are of the opinion, also, that the facts alleged in the plea are sufficient to
make it a good plea; in other words, that the cause of action, so far as there is a
separate and distinct right of action in favor of each bill-holder, was in force on
the 1st of June, 1865.

25

We are of the opinion that it is not necessary first to exhaust the assets of the
bank by legal proceeding. The case is not so much like that of the guaranty of
the 'collection' of a debt, where the previous proceeding against the principal
debtor is implied, as it is like a guaranty of 'payment,' where resort may be had
at once to the guarantor without a previous proceeding against the principal.
Wadsworth v. Wadsworth, 11 Wend, 100; 17 id. 103; 2 Pars. on Bills and
Notes, pp. 142, 143.

26

A judgment and execution unsatisfied are evidence of insolvency, of inability to

collect. They are, however, evidence only; and the fact may be established as
well by other evidence, among other modes, by an assignment and continued
suspension of business, or other notorious indications. Camden v. Doremis, 3
How. 533; Reynolds v. Douglas, 12 Pet. 497; 2 Am. Lead. Cas. 134-136.

27

We think the liability for the 'ultimate redemption' of the bills, if properly
enforced, arises when the bank refuses or ceases to redeem, and is notoriously
and continuously insolvent.

28

Kimber v. Bank of Fulton, 49 Ga. 419, is a decision directly in point by the

Supreme Court of the State of Georgia.

29

The case of Pollard v. Bailey, 20 Wall. 520, is an authority against the

maintenance of a separate action by one creditor who seeks to obtain his entire
debt to the possible exclusion of others similarly situated. The proper
proceeding is in equity, where all the claims can be presented, all the liabilities
of the stockholders ascertained, and a just distribution made.

30

Judgment affirmed.